The Cyprus Ministry of Finance announced Wednesday that it issued a six year international bond for a nominal value of €100 mln at a coupon rate of 6.50%.
The said bonds, issued via private placement, will be listed at the London Stock Exchange and be settled via Euroclear. This access to the Eurobond market is taking place under its newly updated EMTN programme.
This is the first time that Cyprus is tapping into the EMTN market ever since a €10 bln bailout from the Troika of international lenders a year ago, that saw the island undergoing harsh austerity measures and a bail-in of unsecured deposits to rescue biggest lender bank of Cyprus.
“The proceeds of the EMTN transaction will be used for public debt management purposes, including government financing, always in compliance with Cyprus’ economic adjustment programme,” the Ministry of Finance said, suggesting it complies with the hawkish oversight of Troika inspectors who are back on the island next week to review the progress in the bailout.
“The success of the above transaction is attributed to the gradual rebuilding of confidence to the Cyprus economy which in turn is a result of the stronger than expected performance and full compliance of the Republic of Cyprus to the ESM/ IMF adjustment programme,” the ministry added, following favourable reviews by te Troika and upgrades of sovereigns ratings during the past month by all three agencies – Moody’s, Standard and Poor’s and Fitch.
Cyprus lost a foothold in markets in May 2011 after yields on benchmark 10-year bonds spiked rapidly. But from a high of close to 15% in March 2013, yields have now tumbled, quoted at 5.13% on April 9, according to Reuters Eikon data.
"We hope to be in a position to enter the markets towards the end of 2015. It is a very short period of time compared to countries under similar (bailout) programmes," Cyprus President Nicos Anastasiades said in an interview with Reuters earlier in April.
Just two weeks ago, the government said it was about to launch a 6-year savings bond programme for retail investors, carrying an average 4% annual coupon over the term and a low-tax incentive on interest. The minimum subscription is 1,000 euros, issued monthly and open only to Cyprus residents, which includes EU and third country nationals working or with investments on the island.